GBP/USD seesaws below 1.3600 on Brexit chatters, BOE’s Bailey eyed

GBP/USD seesaws around 1.3560-70 following the heaviest daily jump in over a week. While the broad US dollar weakness allowed the Cable pair to recover the previous day, fears concerning Brexit and the UK’s coronavirus conditions seem to weigh on the quote of late.

Having heard of the ‘limited’ progress on the Brexit talks, the UK’s readiness to trigger Article 16 highlights fears concerning the key issue and drag down the GBP/USD prices of late. The Independent said, “Britain’s negotiator Lord David Frost emerged from a meeting with European Commission vice president Maros Sefcovic in Brussels on Friday saying advances towards new trading rules for Northern Ireland had been ‘limited’.” Following that, the BBC came out with the news saying, “Democratic Unionist Party (DUP) leader Sir Jeffrey Donaldson has reiterated his belief that ‘conditions have been met to trigger Article 16,’”

Elsewhere, UK PM Boris Johnson mentions the booster jabbing for the COVID-19 as the "single most important thing" people can do for "our country" and to protect the NHS (National Health Services), per Sky News. “We are starting to see too many elderly people going into hospital,” adds UK PM Johnson.

It’s worth noting that the passage of US President Joe Biden’s $1.0 trillion infrastructure spending plans by the House of Representatives and upbeat US jobs report for October offered a positive start to the week to the markets. The same joined chatters over the Fed reshuffle and weighed on the US Dollar Index (DXY) to help the GBP/USD buyers.

Amid these plays, Wall Street benchmarks closed with mild gains even as the US 10-year Treasury yields recovered.

Looking forward, comments from the Bank of England’s (BOE) Governor Andrew Bailey and Fed Chairman Jerome Powell can offer short-term direction to the GBP/USD prices as both the central bank leaders have been hawkish of late, with the BOE’s Bailey being a bit cautious after the last week’s hint of December hike in rates.

Technical analysis

GBP/USD rebound fades below a downward sloping resistance line from October 29, around 1.3620 by the press time. Also important is the convergence of 50-day and 20-day SMA near 1.3690-3700 area. Adding to the downside bias is the bearish MACD signals and weak RSI line.